Spain’s debt continues to fall with respect to GDP (Gross Domestic Product) due to economic growth. Public debt increased in May to 1.542 trillion euros, a record. But the ratio to GDP, which is one of the main indicators used to measure the sustainability of a country’s debt, dropped to 112.4%, 0.8 percentage points below the closing 113.2%. of 2022.

The minutes of the latest ECB rate hike anticipate more pressure for families and companies


Indebtedness is the first ratio observed to measure the financial sustainability of a country. It depends on both the numerator (debt) and the denominator (GDP). For this reason, although the total public debt continues to increase, the indebtedness decreases due to economic growth, which Spain leads in the euro area, with a forecast of an increase in economic activity of more than 2% this year, after 5.5% in 2022 and another 5.5% in 2021.

“In 2022, a record reduction of 5 percentage points was already achieved in one year,” say sources from the Ministry of Economic Affairs. The same sources recall that in the latest Stability Program, endorsed by the European Commission, “the reduction of the public deficit is brought forward to 2024 [el desequilibrio entre ingresos y gastos del Estado que se cubre con deuda] at 3% and the public debt ratio below 110% of GDP [muy lejos de Italia y también mejor que Francia]”, after exceeding 120% in 2020 due to the shock of the pandemic.

In fact, the First Vice President and Minister of Economy, Nadia Calviño, assures that the public debt would already be below 110% of GDP “if they had not had to assume the 35,000 million accumulated debt of Sareb”, inherited from the management of the PP.

The alarm of the PP

In the economic debate of this electoral campaign, one of the great clashes of the candidate of the Popular Party (PP), Alberto Núñez Feijóo, with the data and expectations has been his effort to alarm citizens with the public debt. In this pre-campaign, he has warned about the “44,000 million that we have to pay only in interest on the debt created” or with the “eight million euros of debt” that he, he says, is generated in one hour.

Everything, without mentioning that this “created debt” has been crucial to protect families against two historical and impossible to foresee ‘shocks’: the pandemic and the Russian invasion of Ukraine.

But the most serious thing is that, in reality, Spain’s interest bill was 31,595 million euros in 2022, 2.2% of GDP. And the Stability Program that the Government sent to the European Commission included the projection of a 7% growth for this figure due to the rises in interest rates from the European Central Bank (ECB). That is, close to 2,200 million more, up to 33,800 million, 2.4% of GDP. In 2013, with the PP in Moncloa, this ratio exceeded 3.5%.

“Spain maintains the confidence of the markets and investor investors, as reflected in the maintenance of the risk premium around 100 basis points, and an interest rate on short-term debt similar to that of Germany,” they insist. from the Ministry headed by the economic vice president, Nadia Calviño.

Recently, the European Stability Mechanism (ESM or ESM) issued a report on Spain’s public finances in which it acknowledges that they have improved “gradually”, but warns that “public debt remains high”. Of course, it stops at the fact that “the Government has made progress in the implementation of the reform agenda associated with the ‘Next Generation EU’ funds [el Plan de Recuperación]” and that, in addition, “an agreement has been reached on the reform of the pension system, increasing income for the social security system”.

“Maintaining this momentum is crucial to boost growth and strengthen the fiscal position,” concludes the MEDE. The ‘black men’ fund also highlights that “Spain maintained favorable access to the market”, despite the rise in interest rates. “The average maturity of Spanish debt is still relatively long, around eight years, which limits its sensitivity to movements in market interest rates,” he comments. And he adds: “The Spanish Treasury can meet its debt payments, including the loan payments to the MEDE.”


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